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ISA 700

INTERNATIONAL STANDARD ON AUDITING 700 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS (Effective for audits of financial statements for periods beginning on or after December 15, 2009) CONTENTS Introduction Scope of this ISA Effective Date Objectives Definitions Requirements Forming an Opinion on the Financial Statements Form of Opinion Auditors Report Supplementary Information Presented with the Financial Statements Application and Other Explanatory Material Qualitative Aspects of the Entitys Accounting Practices Disclosure of the Effect of Material Transactions and Events on the Information Conveyed in the Financial Statements Description of the Applicable Financial Reporting Framework Form of Opinion Auditors Report Supplementary Information Presented with the Financial Statements Appendix: Illustrations of Auditors Reports on Financial Statements Paragraph 1-4 5 6 7 -9 10 - 15 16 - 19 20 - 45 46 - 47 A1 - A3 A4 A5 - A10 A11 - A12 A13 - A44 A45 - A51

International Standard on Auditing (ISA) 700, Forming an Opinion and Reporting on Financial Statements, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Internationa Introduction Scope of this ISA 1. This International Standard on Auditing (ISA) deals with the auditors responsibility to form an opinion on the financial statements. It also deals with the form and content of the auditors report issued as a result of an audit of financial statements.

2. ISA 705 and ISA 706 deal with how the form and content of the auditors report are affected when the auditor expresses a modified opinion or includes an Emphasis of Matter paragraph or an Other Matter paragraph in the auditors report. 3. This ISA is written in the context of a complete set of general purpose financial statements. ISA 800 deals with special considerations when financial statements are prepared in accordance with a special purpose framework. ISA 805 deals with special considerations relevant to an audit of a single financial statement or of a specific element, account or item of a financial statement. 4. This ISA promotes consistency in the auditors report. Consistency in the auditors report, when the audit has been conducted in accordance with ISAs, promotes credibility in the global marketplace by making more readily identifiable those audits that have been conducted in accordance with globally recognized standards. It also helps to promote the users understanding and to identify unusual circumstances when they occur. Effective Date 5. This ISA is effective for audits of financial statements for periods beginning on or after December 15, 2009. Objectives 6. The objectives of the auditor are: 1. To form an opinion on the financial statements based on an evaluation of the conclusions drawn from the audit evidence obtained; and 2. To express clearly that opinion through a written report that also describes the basis for that opinion. Definitions 7. For purposes of the ISAs, the following terms have the meanings attributed below: 1. General purpose financial statements Financial statements prepared in accordance with a general purpose framework. 2. General purpose framework A financial reporting framework designed to meet the common financial information needs of a wide range of users. The financial reporting framework may be a fair presentation framework or a compliance framework. The term fair presentation framework is used to refer to a financial reporting framework that requires compliance with the requirements of the framework and: 1. Acknowledges explicitly or implicitly that, to achieve fair presentation of the financial statements, it may be necessary for management to provide disclosures beyond those specifically required by the framework; or 2. Acknowledges explicitly that it may be necessary for management to depart from a requirement of the framework to achieve fair presentation of the financial statements. Such departures are expected to be necessary only in extremely rare circumstances.

The term compliance framework is used to refer to a financial reporting framework that requires compliance with the requirements of the framework, but does not contain the acknowledgements in (i) or (ii) above. 3. Unmodified opinion The opinion expressed by the auditor when the auditor concludes that the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. 8. Reference to financial statements in this ISA means a complete set of general purpose financial statements, including the related notes. The related notes ordinarily comprise a summary of significant accounting policies and other explanatory information. The requirements of the applicable financial reporting framework determine the form and content of the financial statements, and what constitutes a complete set of financial statements. 9. Reference to International Financial Reporting Standards in this ISA means the International Financial Reporting Standards issued by the International Accounting Standards Board, and reference to International Public Sector Accounting Standards means the International Public Sector Accounting Standards issued by the International Public Sector Accounting Standards Board. Requirements Forming an Opinion on the Financial Statements 10. The auditor shall form an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. 11. In order to form that opinion, the auditor shall conclude as to whether the auditor has obtained reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. That conclusion shall take into account: 1. The auditors conclusion, in accordance with ISA 330, whether sufficient appropriate audit evidence has been obtained; 2. The auditors conclusion, in accordance with ISA 450, whether uncorrected misstatements are material, individually or in aggregate; and 3. The evaluations required by paragraphs 12-15. 12. The auditor shall evaluate whether the financial statements are prepared, in all material respects, in accordance with the requirements of the applicable financial reporting framework. This evaluation shall include consideration of the qualitative aspects of the entitys accounting practices, including indicators of possible bias in managements judgments. (Ref: Para. A1-A3) 13. In particular, the auditor shall evaluate whether, in view of the requirements of the applicable financial reporting framework: 1. The financial statements adequately disclose the significant accounting policies selected and applied;

2. The accounting policies selected and applied are consistent with the applicable financial reporting framework and are appropriate; 3. The accounting estimates made by management are reasonable; 4. The information presented in the financial statements is relevant, reliable, comparable, and understandable; 5. The financial statements provide adequate disclosures to enable the intended users to understand the effect of material transactions and events on the information conveyed in the financial statements; and (Ref: Para. A4) 6. The terminology used in the financial statements, including the title of each financial statement, is appropriate. 14. When the financial statements are prepared in accordance with a fair presentation framework, the evaluation required by paragraphs 12-13 shall also include whether the financial statements achieve fair presentation. The auditors evaluation as to whether the financial statements achieve fair presentation shall include consideration of: 1. The overall presentation, structure and content of the financial statements; and 2. Whether the financial statements, including the related notes, represent the underlying transactions and events in a manner that achieves fair presentation. 15. The auditor shall evaluate whether the financial statements adequately refer to or describe the applicable financial reporting framework. (Ref: Para. A5-A10) Form of Opinion 16. The auditor shall express an unmodified opinion when the auditor concludes that the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. 17. If the auditor: 1. concludes that, based on the audit evidence obtained, the financial statements as a whole are not free from material misstatement; or 2. is unable to obtain sufficient appropriate audit evidence to conclude that the financial statements as a whole are free from material misstatement, the auditor shall modify the opinion in the auditors report in accordance with ISA 705. 18. If financial statements prepared in accordance with the requirements of a fair presentation framework do not achieve fair presentation, the auditor shall discuss the matter with management and, depending on the requirements of the applicable financial reporting framework and how the matter is resolved, shall determine whether it is necessary to modify the opinion in the auditors report in accordance with ISA 705. (Ref: Para. A11) 19. When the financial statements are prepared in accordance with a compliance framework, the auditor is not required to evaluate whether the financial statements achieve fair presentation. However, if in extremely rare circumstances the auditor concludes that such financial statements are misleading, the auditor shall discuss the matter with management and, depending on how it is resolved, shall determine whether, and how, to communicate it in the auditors report. (Ref: Para. A12)

Auditors Report 20. The auditors report shall be in writing. (Ref: Para. A13-A14) Auditors Report for Audits Conducted in Accordance with International Standards on Auditing Title 21. The auditors report shall have a title that clearly indicates that it is the report of an independent auditor. (Ref: Para. A15) Addressee 22. The auditors report shall be addressed as required by the circumstances of the engagement. (Ref: Para. A16) Introductory Paragraph 23. The introductory paragraph in the auditors report shall: (Ref: Para. A17-A19) 1. 2. 3. 4. Identify the entity whose financial statements have been audited; State that the financial statements have been audited; Identify the title of each statement that comprises the financial statements; Refer to the summary of significant accounting policies and other explanatory information; and 5. Specify the date or period covered by each financial statement comprising the financial statements. Managements Responsibility for the Financial Statements 24. This section of the auditors report describes the responsibilities of those in the organization that are responsible for the preparation of the financial statements. The auditors report need not refer specifically to management, but shall use the term that is appropriate in the context of the legal framework in the particular jurisdiction. In some jurisdictions, the appropriate reference may be to those charged with governance. 25. The auditors report shall include a section with the heading Managements [or other appropriate term] Responsibility for the Financial Statements. 26. The auditors report shall describe managements responsibility for the preparation of the financial statements. The description shall include an explanation that management is responsible for the preparation of the financial statements in accordance with the applicable financial reporting framework, and for such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. (Ref: Para. A20-A23) 27. Where the financial statements are prepared in accordance with a fair presentation framework, the explanation of managements responsibility for the financial statements in the auditors report shall refer to the preparation and fair presentation of these financial

statements or the preparation of financial statements that give a true and fair view, as appropriate in the circumstances. Auditors Responsibility 28. The auditors report shall include a section with the heading Auditors Responsibility. 29. The auditors report shall state that the responsibility of the auditor is to express an opinion on the financial statements based on the audit. (Ref: Para. A24) 30. The auditors report shall state that the audit was conducted in accordance with International Standards on Auditing. The auditors report shall also explain that those standards require that the auditor comply with ethical requirements and that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. (Ref: Para. A25-A26) 31. The auditors report shall describe an audit by stating that: 1. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements; 2. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. In circumstances when the auditor also has a responsibility to express an opinion on the effectiveness of internal control in conjunction with the audit of the financial statements, the auditor shall omit the phrase that the auditors consideration of internal control is not for the purpose of expressing an opinion on the effectiveness of internal control; and 3. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management, as well as the overall presentation of the financial statements. 32. Where the financial statements are prepared in accordance with a fair presentation framework, the description of the audit in the auditors report shall refer to the entitys preparation and fair presentation of the financial statements or the entitys preparation of financial statements that give a true and fair view, as appropriate in the circumstances. 33. The auditors report shall state whether the auditor believes that the audit evidence the auditor has obtained is sufficient and appropriate to provide a basis for the auditors opinion. Auditors Opinion 34. The auditors report shall include a section with the heading Opinion. 35. When expressing an unmodified opinion on financial statements prepared in accordance with a fair presentation framework, the auditors opinion shall, unless otherwise required by

law or regulation, use one of the following phrases, which are regarded as being equivalent: (Ref: Para. A27-A33) 1. The financial statements present fairly, in all material respects, in accordance with [the applicable financial reporting framework]; or 2. The financial statements give a true and fair view of in accordance with [the applicable financial reporting framework]. 36. When expressing an unmodified opinion on financial statements prepared in accordance with a compliance framework, the auditors opinion shall be that the financial statements are prepared, in all material respects, in accordance with [the applicable financial reporting framework]. (Ref: Para. A27, A29-A33) 37. If the reference to the applicable financial reporting framework in the auditors opinion is not to International Financial Reporting Standards issued by the International Accounting Standards Board or International Public Sector Accounting Standards issued by the International Public Sector Accounting Standards Board, the auditors opinion shall identify the jurisdiction of origin of the framework. Other Reporting Responsibilities 38. If the auditor addresses other reporting responsibilities in the auditors report on the financial statements that are in addition to the auditors responsibility under the ISAs to report on the financial statements, these other reporting responsibilities shall be addressed in a separate section in the auditors report that shall be sub-titled Report on Other Legal and Regulatory Requirements, or otherwise as appropriate to the content of the section. (Ref: Para. A34-A35) 39. If the auditors report contains a separate section on other reporting responsibilities, the headings, statements and explanations referred to in paragraphs 23-37 shall be under the subtitle Report on the Financial Statements. The Report on Other Legal and Regulatory Requirements shall follow the Report on the Financial Statements. (Ref: Para. A36) Signature of the Auditor 40. The auditors report shall be signed. (Ref: Para. A37) Date of the Auditors Report 41. The auditors report shall be dated no earlier than the date on which the auditor has obtained sufficient appropriate audit evidence on which to base the auditors opinion on the financial statements, including evidence that: (Ref: Para. A38-A41) 1. All the statements that comprise the financial statements, including the related notes, have been prepared; and 2. Those with the recognized authority have asserted that they have taken responsibility for those financial statements. Auditors Address

42. The auditors report shall name the location in the jurisdiction where the auditor practices. Auditors Report Prescribed by Law or Regulation 43. If the auditor is required by law or regulation of a specific jurisdiction to use a specific layout or wording of the auditors report, the auditors report shall refer to International Standards on Auditing only if the auditors report includes, at a minimum, each of the following elements: (Ref: Para. A42) 1. 2. 3. 4. 5. A title; An addressee, as required by the circumstances of the engagement; An introductory paragraph that identifies the financial statements audited; A description of the responsibility of management (or other appropriate term, see paragraph 24) for the preparation of the financial statements; A description of the auditors responsibility to express an opinion on the financial statements and the scope of the audit, that includes: o A reference to International Standards on Auditing and the law or regulation; and o A description of an audit in accordance with those standards; An opinion paragraph containing an expression of opinion on the financial statements and a reference to the applicable financial reporting framework used to prepare the financial statements (including identifying the jurisdiction of origin of the financial reporting framework that is not International Financial Reporting Standards or International Public Sector Accounting Standards, see paragraph 37); The auditors signature; The date of the auditors report; and The auditors address.

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Auditors Report for Audits Conducted in Accordance with Both Auditing Standards of a Specific Jurisdiction and International Standards on Auditing 44. An auditor may be required to conduct an audit in accordance with the auditing standards of a specific jurisdiction (the national auditing standards), but may additionally have complied with the ISAs in the conduct of the audit. If this is the case, the auditors report may refer to International Standards on Auditing in addition to the national auditing standards, but the auditor shall do so only if: (Ref: Para. A43-A44) 1. There is no conflict between the requirements in the national auditing standards and those in ISAs that would lead the auditor (i) to form a different opinion, or (ii) not to include an Emphasis of Matter paragraph that, in the particular circumstances, is required by ISAs; and 2. The auditors report includes, at a minimum, each of the elements set out in paragraph 43(a)-(i) when the auditor uses the layout or wording specified by the national auditing standards. Reference to law or regulation in paragraph 43(e) shall be read as reference to the national auditing standards. The auditors report shall thereby identify such national auditing standards. 45. When the auditors report refers to both the national auditing standards and International Standards on Auditing, the auditors report shall identify the jurisdiction of origin of the national auditing standards.

Supplementary Information Presented with the Financial Statements (Ref: Para. A45-A51) 46. If supplementary information that is not required by the applicable financial reporting framework is presented with the audited financial statements, the auditor shall evaluate whether such supplementary information is clearly differentiated from the audited financial statements. If such supplementary information is not clearly differentiated from the audited financial statements, the auditor shall ask management to change how the unaudited supplementary information is presented. If management refuses to do so, the auditor shall explain in the auditors report that such supplementary information has not been audited. 47. Supplementary information that is not required by the applicable financial reporting framework but is nevertheless an integral part of the financial statements because it cannot be clearly differentiated from the audited financial statements due to its nature and how it is presented shall be covered by the auditors opinion. *** Application and Other Explanatory Material Qualitative Aspects of the Entitys Accounting Practices (Ref: Para. 12) A1. Management makes a number of judgments about the amounts and disclosures in the financial statements. A2. ISA 260 contains a discussion of the qualitative aspects of accounting practices. In considering the qualitative aspects of the entitys accounting practices, the auditor may become aware of possible bias in managements judgments. The auditor may conclude that the cumulative effect of a lack of neutrality, together with the effect of uncorrected misstatements, causes the financial statements as a whole to be materially misstated. Indicators of a lack of neutrality that may affect the auditors evaluation of whether the financial statements as a whole are materially misstated include the following:

The selective correction of misstatements brought to managements attention during the audit (e.g., correcting misstatements with the effect of increasing reported earnings, but not correcting misstatements that have the effect of decreasing reported earnings). Possible management bias in the making of accounting estimates.

A3. ISA 540 addresses possible management bias in making accounting estimates. Indicators of possible management bias do not constitute misstatements for purposes of drawing conclusions on the reasonableness of individual accounting estimates. They may, however, affect the auditors evaluation of whether the financial statements as a whole are free from material misstatement. Disclosure of the Effect of Material Transactions and Events on the Information Conveyed in the Financial Statements (Ref: Para. 13(e)) A4. It is common for financial statements prepared in accordance with a general purpose framework to present an entitys financial position, financial performance and cash flows. In such circumstances, the auditor evaluates whether the financial statements provide adequate

disclosures to enable the intended users to understand the effect of material transactions and events on the entitys financial position, financial performance and cash flows. Description of the Applicable Financial Reporting Framework (Ref: Para. 15) A5. As explained in ISA 200, the preparation of the financial statements by management and, where appropriate, those charged with governance requires the inclusion of an adequate description of the applicable financial reporting framework in the financial statements. That description is important because it advises users of the financial statements of the framework on which the financial statements are based. A6. A description that the financial statements are prepared in accordance with a particular applicable financial reporting framework is appropriate only if the financial statements comply with all the requirements of that framework that are effective during the period covered by the financial statements. A7. A description of the applicable financial reporting framework that contains imprecise qualifying or limiting language (e.g., the financial statements are in substantial compliance with International Financial Reporting Standards) is not an adequate description of that framework as it may mislead users of the financial statements. Reference to More than One Financial Reporting Framework A8. In some cases, the financial statements may represent that they are prepared in accordance with two financial reporting frameworks (e.g., the national framework and International Financial Reporting Standards). This may be because management is required, or has chosen, to prepare the financial statements in accordance with both frameworks, in which case both are applicable financial reporting frameworks. Such description is appropriate only if the financial statements comply with each of the frameworks individually. To be regarded as being prepared in accordance with both frameworks, the financial statements need to comply with both frameworks simultaneously and without any need for reconciling statements. In practice, simultaneous compliance is unlikely unless the jurisdiction has adopted the other framework (e.g., International Financial Reporting Standards) as its own national framework, or has eliminated all barriers to compliance with it. A9. Financial statements that are prepared in accordance with one financial reporting framework and that contain a note or supplementary statement reconciling the results to those that would be shown under another framework, are not prepared in accordance with that other framework. This is because the financial statements do not include all the information in the manner required by that other framework. A10. The financial statements may, however, be prepared in accordance with one applicable financial reporting framework and, in addition, describe in the notes to the financial statements the extent to which the financial statements comply with another framework (e.g., financial statements prepared in accordance with the national framework that also describe the extent to which they comply with International Financial Reporting Standards). Such description is supplementary financial information and, as discussed in paragraph 47, is considered an integral part of the financial statements and, accordingly, is covered by the auditors opinion.

Form of Opinion (Ref: Para. 18-19) A11. There may be cases where the financial statements, although prepared in accordance with the requirements of a fair presentation framework, do not achieve fair presentation. Where this is the case, it may be possible for management to include additional disclosures in the financial statements beyond those specifically required by the framework or, in extremely rare circumstances, to depart from a requirement in the framework in order to achieve fair presentation of the financial statements. A12. It will be extremely rare for the auditor to consider financial statements that are prepared in accordance with a compliance framework to be misleading if, in accordance with ISA 210, the auditor determined that the framework is acceptable. Auditors Report (Ref: Para. 20) A13. A written report encompasses reports issued in hard copy format and those using an electronic medium. A14. The Appendix contains illustrations of auditors reports on financial statements, incorporating the elements set forth in paragraphs 21-42. Auditors Report for Audits Conducted in Accordance with International Standards on Auditing Title (Ref: Para. 21) A15. A title indicating the report is the report of an independent auditor, for example, Independent Auditors Report, affirms that the auditor has met all of the relevant ethical requirements regarding independence and, therefore, distinguishes the independent auditors report from reports issued by others. Addressee (Ref: Para. 22) A16. Law or regulation often specifies to whom the auditors report is to be addressed in that particular jurisdiction. The auditors report is normally addressed to those for whom the report is prepared, often either to the shareholders or to those charged with governance of the entity whose financial statements are being audited. Introductory Paragraph (Ref: Para. 23) A17. The introductory paragraph states, for example, that the auditor has audited the accompanying financial statements of the entity, which comprise [state the title of each financial statement comprising the complete set of financial statements required by the applicable financial reporting framework, specifying the date or period covered by each financial statement] and referring to the summary of significant accounting policies and other explanatory information. A18. When the auditor is aware that the audited financial statements will be included in a document that contains other information, such as an annual report, the auditor may consider, if the form of presentation allows, identifying the page numbers on which the audited

financial statements are presented. This helps users to identify the financial statements to which the auditors report relates. A19. The auditors opinion covers the complete set of financial statements as defined by the applicable financial reporting framework. For example, in the case of many general purpose frameworks, the financial statements include: a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and a summary of significant accounting policies and other explanatory information. In some jurisdictions additional information might also be considered to be an integral part of the financial statements. Managements Responsibility for the Financial Statements (Ref: Para. 26) A20. ISA 200 explains the premise, relating to the responsibilities of management and, where appropriate, those charged with governance, on which an audit in accordance with ISAs is conducted. Management and, where appropriate, those charged with governance accept responsibility for the preparation of the financial statements in accordance with the applicable financial reporting framework, including, where relevant, their fair presentation. Management also accepts responsibility for such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The description of managements responsibilities in the auditors report includes reference to both responsibilities as it helps to explain to users the premise on which an audit is conducted. A21. There may be circumstances when it is appropriate for the auditor to add to the description of managements responsibility in paragraph 26 to reflect additional responsibilities that are relevant to the preparation of the financial statements in the context of the particular jurisdiction or the nature of the entity. A22. Paragraph 26 is consistent with the form in which the responsibilities are agreed in the engagement letter or other suitable form of written agreement, as required by ISA 210. ISA 210 provides some flexibility by explaining that, if law or regulation prescribes the responsibilities of management and, where appropriate, those charged with governance in relation to financial reporting, the auditor may determine that the law or regulation includes responsibilities that, in the auditors judgment, are equivalent in effect to those set out in ISA 210. For such responsibilities that are equivalent, the auditor may use the wording of the law or regulation to describe them in the engagement letter or other suitable form of written agreement. In such cases, this wording may also be used in the auditors report to describe managements responsibilities as required by paragraph 26. In other circumstances, including where the auditor decides not to use the wording of law or regulation as incorporated in the engagement letter, the wording of paragraph 26 is used. A23. In some jurisdictions, law or regulation prescribing managements responsibilities may specifically refer to a responsibility for the adequacy of accounting books and records, or accounting system. As books, records and systems are an integral part of internal control (as defined in ISA 315), the descriptions in ISA 210 and in paragraph 26 do not make specific reference to them. Auditors Responsibility (Ref: Para. 29-30)

A24. The auditors report states that the auditors responsibility is to express an opinion on the financial statements based on the audit in order to contrast it to managements responsibility for the preparation of the financial statements. A25. The reference to the standards used conveys to the users of the auditors report that the audit has been conducted in accordance with established standards. A26. In accordance with ISA 200, the auditor does not represent compliance with ISAs in the auditors report unless the auditor has complied with the requirements of ISA 200 and all other ISAs relevant to the audit. Auditors Opinion (Ref: Para. 35-37) Wording of the auditors opinion prescribed by law or regulation A27. ISA 210 explains that, in some cases, law or regulation of the relevant jurisdiction prescribes the wording of the auditors report (which in particular includes the auditors opinion) in terms that are significantly different from the requirements of ISAs. In these circumstances, ISA 210 requires the auditor to evaluate: 1. Whether users might misunderstand the assurance obtained from the audit of the financial statements and, if so, 2. Whether additional explanation in the auditors report can mitigate possible misunderstanding. If the auditor concludes that additional explanation in the auditors report cannot mitigate possible misunderstanding, ISA 210 requires the auditor not to accept the audit engagement, unless required by law or regulation to do so. In accordance with ISA 210, an audit conducted in accordance with such law or regulation does not comply with ISAs. Accordingly, the auditor does not include any reference in the auditors report to the audit having been conducted in accordance with International Standards on Auditing. Present fairly, in all material respects or give a true and fair view A28. Whether the phrase present fairly, in all material respects, or the phrase give a true and fair view is used in any particular jurisdiction is determined by the law or regulation governing the audit of financial statements in that jurisdiction, or by generally accepted practice in that jurisdiction. Where law or regulation requires the use of different wording, this does not affect the requirement in paragraph 14 of this ISA for the auditor to evaluate the fair presentation of financial statements prepared in accordance with a fair presentation framework. Description of information that the financial statements present A29. In the case of financial statements prepared in accordance with a fair presentation framework, the auditors opinion states that the financial statements present fairly, in all material respects, or give a true and fair view of the information that the financial statements are designed to present, for example, in the case of many general purpose frameworks, the financial position of the entity as at the end of the period and the entitys financial performance and cash flows for the period then ended.

Description of the applicable financial reporting framework and how it may affect the auditors opinion A30. The identification of the applicable financial reporting framework in the auditors opinion is intended to advise users of the auditors report of the context in which the auditors opinion is expressed; it is not intended to limit the evaluation required in paragraph 14. The applicable financial reporting framework is identified in such terms as: in accordance with International Financial Reporting Standards or in accordance with accounting principles generally accepted in Jurisdiction X A31. When the applicable financial reporting framework encompasses financial reporting standards and legal or regulatory requirements, the framework is identified in such terms as in accordance with International Financial Reporting Standards and the requirements of Jurisdiction X Corporations Act. ISA 210 deals with circumstances where there are conflicts between the financial reporting standards and the legislative or regulatory requirements. A32. As indicated in paragraph A8, the financial statements may be prepared in accordance with two financial reporting frameworks, which are therefore both applicable financial reporting frameworks. Accordingly, each framework is considered separately when forming the auditors opinion on the financial statements, and the auditors opinion in accordance with paragraphs 35- 36 refers to both frameworks as follows: 1. If the financial statements comply with each of the frameworks individually, two opinions are expressed: that is, that the financial statements are prepared in accordance with one of the applicable financial reporting frameworks (e.g., the national framework) and an opinion that the financial statements are prepared in accordance with the other applicable financial reporting framework (e.g., International Financial Reporting Standards). These opinions may be expressed separately or in a single sentence (e.g., the financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in Jurisdiction X and with International Financial Reporting Standards). 2. If the financial statements comply with one of the frameworks but fail to comply with the other framework, an unmodified opinion can be given that the financial statements are prepared in accordance with the one framework (e.g., the national framework) but a modified opinion given with regard to the other framework (e.g., International Financial Reporting Standards) in accordance with ISA 705. A33. As indicated in paragraph A10, the financial statements may represent compliance with the applicable financial reporting framework and, in addition, disclose the extent of compliance with another financial reporting framework. As explained in paragraph A46, such supplementary information is covered by the auditors opinion as it cannot be clearly differentiated from the financial statements. 1. If the disclosure as to the compliance with the other framework is misleading, a modified opinion is expressed in accordance with ISA 705. 2. If the disclosure is not misleading, but the auditor judges it to be of such importance that it is fundamental to the users understanding of the financial statements, an

Emphasis of Matter paragraph is added in accordance with ISA 706, drawing attention to the disclosure. Other Reporting Responsibilities (Ref: Para. 38-39) A34. In some jurisdictions, the auditor may have additional responsibilities to report on other matters that are supplementary to the auditors responsibility under the ISAs to report on the financial statements. For example, the auditor may be asked to report certain matters if they come to the auditors attention during the course of the audit of the financial statements. Alternatively, the auditor may be asked to perform and report on additional specified procedures, or to express an opinion on specific matters, such as the adequacy of accounting books and records. Auditing standards in the specific jurisdiction often provide guidance on the auditors responsibilities with respect to specific additional reporting responsibilities in that jurisdiction. A35. In some cases, the relevant law or regulation may require or permit the auditor to report on these other responsibilities within the auditors report on the financial statements. In other cases, the auditor may be required or permitted to report on them in a separate report. A36. These other reporting responsibilities are addressed in a separate section of the auditors report in order to clearly distinguish them from the auditors responsibility under the ISAs to report on the financial statements. Where relevant, this section may contain sub-heading(s) that describe(s) the content of the other reporting responsibility paragraph(s). Signature of the Auditor (Ref: Para. 40) A37. The auditors signature is either in the name of the audit firm, the personal name of the auditor or both, as appropriate for the particular jurisdiction. In addition to the auditors signature, in certain jurisdictions, the auditor may be required to declare in the auditors report the auditors professional accountancy designation or the fact that the auditor or firm, as appropriate, has been recognized by the appropriate licensing authority in that jurisdiction. Date of the Auditors Report (Ref: Para. 41) A38. The date of the auditors report informs the user of the auditors report that the auditor has considered the effect of events and transactions of which the auditor became aware and that occurred up to that date. The auditors responsibility for events and transactions after the date of the auditors report is addressed in ISA 560. A39. Since the auditors opinion is provided on the financial statements and the financial statements are the responsibility of management, the auditor is not in a position to conclude that sufficient appropriate audit evidence has been obtained until evidence is obtained that all the statements that comprise the financial statements, including the related notes, have been prepared and management has accepted responsibility for them. A40. In some jurisdictions, the law or regulation identifies the individuals or bodies (e.g., the directors) that are responsible for concluding that all the statements that comprise the financial statements, including the related notes, have been prepared, and specifies the necessary approval process. In such cases, evidence is obtained of that approval before dating the report on the financial statements. In other jurisdictions, however, the approval process is

not prescribed in law or regulation. In such cases, the procedures the entity follows in preparing and finalizing its financial statements in view of its management and governance structures is considered in order to identify the individuals or body with the authority to conclude that all the statements that comprise the financial statements, including the related notes, have been prepared. In some cases, law or regulation identifies the point in the financial statement reporting process at which the audit is expected to be complete. A41. In some jurisdictions, final approval of the financial statements by shareholders is required before the financial statements are issued publicly. In these jurisdictions, final approval by shareholders is not necessary for the auditor to conclude that sufficient appropriate audit evidence has been obtained. The date of approval of the financial statements for purposes of ISAs is the earlier date on which those with the recognized authority determine that all the statements that comprise the financial statements, including the related notes, have been prepared and that those with the recognized authority have asserted that they have taken responsibility for them. Auditors Report Prescribed by Law or Regulation (Ref: Para. 43) A42. ISA 200 explains that the auditor may be required to comply with legal or regulatory requirements in addition to ISAs. Where this is the case, the auditor may be obliged to use a layout or wording in the auditors report that differs from that described in this ISA. As explained in paragraph 4, consistency in the auditors report, when the audit has been conducted in accordance with ISAs, promotes credibility in the global marketplace by making more readily identifiable those audits that have been conducted in accordance with globally recognized standards. When the differences between the legal or regulatory requirements and ISAs relate only to the layout and wording of the auditors report and, at a minimum, each of the elements identified in paragraph 43(a)-(i) are included in the auditors report, the auditors report may refer to International Standards on Auditing. Accordingly, in such circumstances the auditor is considered to have complied with the requirements of ISAs, even when the layout and wording used in the auditors report are specified by legal or regulatory reporting requirements. Where specific requirements in a particular jurisdiction do not conflict with ISAs, adoption of the layout and wording used in this ISA assists users of the auditors report more readily to recognize the auditors report as a report on an audit conducted in accordance with ISAs. (ISA 210 deals with circumstances where law or regulation prescribes the layout or wording of the auditors report in terms that are significantly different from the requirements of ISAs.) Auditors Report for Audits Conducted in Accordance with Both Auditing Standards of a Specific Jurisdiction and International Standards on Auditing (Ref: Para. 44) A43. The auditor may refer in the auditors report to the audit having been conducted in accordance with both International Standards on Auditing as well as the national auditing standards when, in addition to complying with the relevant national auditing standards, the auditor complies with each of the ISAs relevant to the audit. A44. A reference to both International Standards on Auditing and the national auditing standards is not appropriate if there is a conflict between the requirements in ISAs and those in the national auditing standards that would lead the auditor to form a different opinion or not to include an Emphasis of Matter paragraph that, in the particular circumstances, is required by ISAs. For example, some national auditing standards prohibit the auditor from

including an Emphasis of Matter paragraph to highlight a going concern problem, whereas ISA 570 requires the auditor to add an Emphasis of Matter paragraph in such circumstances. In such a case, the auditors report refers only to the auditing standards (either International Standards on Auditing or the national auditing standards) in accordance with which the auditors report has been prepared. Supplementary Information Presented with the Financial Statements (Ref: Para. 46-47) A45. In some circumstances, the entity may be required by law, regulation or standards, or may voluntarily choose, to present together with the financial statements supplementary information that is not required by the applicable financial reporting framework. For example, supplementary information might be presented to enhance a users understanding of the applicable financial reporting framework or to provide further explanation of specific financial statement items. Such information is normally presented in either supplementary schedules or as additional notes. A46. The auditors opinion covers supplementary information that cannot be clearly differentiated from the financial statements because of its nature and how it is presented. For example, this would be the case when the notes to the financial statements include an explanation of the extent to which the financial statements comply with another financial reporting framework. The auditors opinion would also cover notes or supplementary schedules that are cross-referenced from the financial statements. A47. Supplementary information that is covered by the auditors opinion does not need to be specifically referred to in the introductory paragraph of the auditors report when the reference to the notes in the description of the statements that comprise the financial statements in the introductory paragraph is sufficient. A48. Law or regulation may not require that the supplementary information be audited, and management may decide not to ask the auditor to include the supplementary information within the scope of the audit of the financial statements. A49. The auditors evaluation whether unaudited supplementary information is presented in a manner that could be construed as being covered by the auditors opinion includes, for example, where that information is presented in relation to the financial statements and any audited supplementary information, and whether it is clearly labeled as unaudited. A50. Management could change the presentation of unaudited supplementary information that could be construed as being covered by the auditors opinion, for example, by:

Removing any cross-references from the financial statements to unaudited supplementary schedules or unaudited notes so that the demarcation between the audited and unaudited information is sufficiently clear. Placing the unaudited supplementary information outside of the financial statements or, if that is not possible in the circumstances, at a minimum place the unaudited notes together at the end of the required notes to the financial statements and clearly label them as unaudited. Unaudited notes that are intermingled with the audited notes can be misinterpreted as being audited.

A51. The fact that supplementary information is unaudited does not relieve the auditor of the responsibility to read that information to identify material inconsistencies with the audited

financial statements. The auditors responsibilities with respect to unaudited supplementary information are consistent with those described in ISA 720. Appendix (Ref: Para. A14) Illustrations of Auditors Reports on Financial Statements

Illustration 1: An auditors report on financial statements prepared in accordance with a fair presentation framework designed to meet the common financial information needs of a wide range of users (e.g., International Financial Reporting Standards). Illustration 2: An auditors report on financial statements prepared in accordance with a compliance framework designed to meet the common financial information needs of a wide range of users. Illustration 3: An auditors report on consolidated financial statements prepared in accordance with a fair presentation framework designed to meet the common financial information needs of a wide range of users (e.g., International Financial Reporting Standards).

Illustration 1: Circumstances include the following:


Audit of a complete set of financial statements. The financial statements are prepared for a general purpose by management of the entity in accordance with International Financial Reporting Standards. The terms of the audit engagement reflect the description of managements responsibility for th financial statements in ISA 210. In addition to the audit of the financial statements, the auditor has other reporting responsibilities required under local law.

INDEPENDENT AUDITORS REPORT [Appropriate Addressee] Report on the Financial Statements We have audited the accompanying financial statements of ABC Company, which comprise the statement of financial position as at December 31, 20X1, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such

internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, (or give a true and fair view of) the financial position of ABC Company as at December 31, 20X1, and (of) its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Report on Other Legal and Regulatory Requirements [Form and content of this section of the auditors report will vary depending on the nature of the auditors other reporting responsibilities.] [Auditors signature] [Date of the auditors report] [Auditors address] Illustration 2: Circumstances include the following:

Audit of a complete set of financial statements required by law or regulation. The financial statements are prepared for a general purpose by management of the entity in accordance with the Financial Reporting Framework (XYZ Law) of Jurisdiction X (i.e., a

financial reporting framework, encompassing law or regulation, designed to meet the common financial information needs of a wide range of users, but which is not a fair presentation framework). The terms of the audit engagement reflect the description of managements responsibility for th financial statements in ISA 210.

INDEPENDENT AUDITORS REPORT [Appropriate Addressee] We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as at December 31, 20X1, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Managements Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements in accordance with XYZ Law of Jurisdiction X, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements of ABC Company for the year ended December 31, 20X1 are prepared, in all material respects, in accordance with XYZ Law of Jurisdiction X. [Auditors signature]

[Date of the auditors report] [Auditors address] Illustration 3: Circumstances include the following:

Audit of consolidated financial statements prepared for a general purpose by management of th parent in accordance with International Financial Reporting Standards. The terms of the group audit engagement reflect the description of managements responsibility for the financial statements in ISA 210. In addition to the audit of the group financial statements, the auditor has other reporting responsibilities required under local law.

INDEPENDENT AUDITORS REPORT [Appropriate Addressee] Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of ABC Company and its subsidiaries, which comprise the consolidated statement of financial position as at December 31, 20X1, and the consolidated statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Managements Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair

presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, (or give a true and fair view of) the financial position of ABC Company and its subsidiaries as at December 31, 20X1, and (of) their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards. Report on Other Legal and Regulatory Requirements [Form and content of this section of the auditors report will vary depending on the nature of the auditors other reporting responsibilities.] [Auditors signature] [Date of the auditors report] [Auditors address]